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Emerald Article: Expatriate performance management from MNEs of different national origins Hsi-An Shih, Yun-Hwa Chiang, In-Sook Kim
To cite this document: Hsi-An Shih, Yun-Hwa Chiang, In-Sook Kim, (2005),"Expatriate performance management from MNEs of different national origins", International Journal of Manpower, Vol. 26 Iss: 2 pp. 157 - 176 Permanent link to this document: http://dx.doi.org/10.1108/01437720510597658 Downloaded on: 01-05-2012 References: This document contains references to 45 other documents Citations: This document has been cited by 1 other documents To copy this document: firstname.lastname@example.org This document has been downloaded 5749 times.
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Expatriate performance management from MNEs of different national origins
Institute of International Business, National Cheng Kung University, Tainan, Taiwan
Expatriate performance management 157
Received August 2003 Revised June 2004 Accepted August 2004
Ming-Chuan University, Taipei, Taiwan, and
Institute of International Business, National Cheng Kung University, Tainan, Taiwan
Purpose – This study tries to explore through multiple case studies how expatriate performance management is conducted in multinational enterprises (MNEs) of different national origins. Design/methodology/approach – Multiple interviews were conducted with expatriate employees and human resource managers of ﬁve MNE subsidiaries operating in the information technology industry, namely, Applied Material (American), Philips (Dutch), Hitachi (Japanese), Samsung (Korean), and Winbond (Taiwan). Findings – The ﬁndings show that all of the ﬁrms surveyed use standardized performance forms set by headquarters, which are not tailored to local operating environments. Also, lack of on-the-job training for expatriates was found to be prevalent among the ﬁve MNE subsidiaries. Divergent practices in goal setting, performance appraisal, and performance-related pay were largely attributed to the parent company’s culture. The nature of the expatriate mission was another reason for different arrangements in expatriate performance management. Originality/value – This study is one of the ﬁrst to explore expatriate performance management practices of multinational ﬁrms. There does not seem to exist a prevalent form of expatriate performance management and such a practice is to some extent more strongly subjected to the inﬂuence of the parent company’s culture. Keywords Expatriates, Performance management, Performance appraisal, Multinational companies Paper type Case study
Introduction Expatriate management has attracted much attention in the ﬁeld of international human resource management (IHRM), given that expatriate employees play a critical role in the success of multinational enterprises (MNEs) (Black et al., 1998; Dowling et al., 1999). They are also among the most expensive personnel in any organization operating internationally (Dowling et al., 1999). Expatriate management involves issues and problems that go beyond those of most other types of employees. Yet our understanding of expatriates and their management is notably less than that of other
The authors would like to thank two anonymous referees for their valuable comments.
International Journal of Manpower Vol. 26 No. 2, 2005 pp. 157-176 q Emerald Group Publishing Limited 0143-7720 DOI 10.1108/01437720510597658
Only a few have looked at how MNEs conduct EPM in practice (e. as well as clearer communication and appropriate incentives. Milliman et al. Tahvanainen. McEvoy and Cascio (1990) compared American and Taiwanese performance appraisal practices and found that the latter react in a more . including goal setting. we conducted interviews with expatriates and human resource managers of ﬁve MNEs in the information technology (IT) industry. a proper research strategy will be to conduct in-depth interviews with practical managers and obtain ﬁrst-hand information. Only through a better understanding concerning EPM practices in various MNEs can we build sound foundation for latter empirical research. Our purpose was to obtain detailed information on EPM practices. 1996). Suutari and Tahvanainen. 1995. 2000. Samsung Taiwan (Samsung). however. and within international context. 2000. 1988. and Winbond (see Table I for company proﬁles). Even then. 1998). Through effective coordination of individual objectives and corporate strategy. Over the past 20 years. With regard to expatriate performance management (EPM). Armstrong and Baron. Indeed. Jackson and Schuler. 2002). 1996. 1998). EPM context in this study EPM is very context related. 2000. these researches focused on just one company (Nokia) or a single country culture (American or Finnish MNEs). McEvoy and Cascio. PM has expanded from evaluating employee performance to more comprehensive functions such as goal setting. and performance-related pay. expatriates are often far from being the best-managed employees (Dowling et al. 1995). within domestic context.. 2003). Gregersen et al. These ﬁrms are: Applied Materials Taiwan (hereafter called AMT). 1990.. 1999. Paik et al. training and development. Do MNEs of different national origins manage their EPM differently? In what respects do they differ? What are the factors causing their similarities and differences? Under such circumstances. in this study. Snape et al.2 158 employees. Tung.g. Suutari and Tahvanainen (2002) ﬁnd that home country managers are more likely to participate in goal setting in less internationalized companies. Hitachi Taiwan (Hitachi). 1996. Previous studies largely focused on PM issues concerning domestic employees (see Schneider. Tahvanainen (1998) indicates that EPM is affected by three layers of contextual factors: within organization context. there is scant empirical literature. feedback and development. performance appraisal. Philips Taiwan (Philips). PM can help companies to induce desired employee behavior and better ﬁrm performance (Tahvanainen.. These facts reveal that we presently know very little about expatriate management. 1998.. Although scholars contend that national culture is an important contextual variable that inﬂuences EPM (Tahvanainen. and to explore the reasons for any perceived convergence or divergence found. Hence. while host country managers in highly internationalized MNEs are more involved in EPM and establish formal performance goals and adopt an evaluation process. Caligiuri and Day. Level of internationalization is a major concern in the international context. Performance management (PM) has traditionally been used as a guide for employee performance. there has been little research done on how MNEs of different national origins manage their EPM in practice. National culture is the most important variable involved in the domestic context (Schuler et al.. and motivation (Mabey and Salaman. 1998). training..IJM 26.
000 employees in 20 countries Samsung Electronics Industries. (ten informants are randomly selected to participate in our study) Six mid.to high-level managerial positions and 50 technical engineers.000 employees Provide IT infrastructure Santa and services to Taiwanese Clara. (three managers and one technician are randomly selected to participate in our study) Buy and sell semiconductor products Hsinchu.Company Semiconductor 1990 16. Korea 173. Taiwan Semiconductor 1966 Dutch Semiconductor 1966 and TFT-LCD Eindhoven.to high-level managerial positions and two technical engineers. Japan 470. (two managers and 13 engineers are randomly selected to participate in our study) Seven mid.000 Holland employees in 60 countries Suwon. Taiwan Japanese Semiconductor 1970 Buy and sell semiconductor products and electronic components Tokyo. (two managers and one engineer are randomly selected to participate in our study) 11 top managerial positions. (four managers are randomly selected to participate in our study) Four mid. China Taiwanese Semiconductor 1997 30 technical engineers in both ordinary and managerial positions.to high-level managerial positions and three R&D technicians. USA in 13 countries semiconductor customers Nationality Industry Established Expatriate information Main business Home base Global spread Applied Materials.000 employees in six countries Expatriate performance management 159 Table I. Company proﬁles . Taiwan Korean Manufacture and sell semiconductor and electronic components and TFT-LCDs Buy and sell semiconductor and electronic components and TFT-LCDs Winbond Electronics Corporation. Taiwan American Hitachi High-Technologies. 192. 000 employees in 23 countries Philips Electronics Industries. Taiwan 47.
. Based on the different nature of their mission. The performance appraisal system inﬂuences the behavior and performance of individuals (McGregor. Hence. (1998) also reported differences between Britain and Hong Kong regarding employee participation in goal setting and appraisal feedback. 1997).2 160 conservative manner and avoid open confrontation. Also. Tahvanainen (2000) also emphasized that the nature of the expatriate job is one of the crucial factors that inﬂuence the content of EPM systems. 1996). The Taiwanese subsidiaries of Samsung employ about 150 workers. The ﬁve companies in our study all adopt functional organizational structure. It follows that expatriate performance appraisal should be tailored according to the nature of the expatriate’s mission. we coin the term “nature of expatriate mission” to mean whether the expatriate has been assigned overseas as a short-term engineer to solve particular technical problems (troubleshooter) or whether they are engineers or managers that are stationed in the host country for several years to disseminate technical and management know-how. While expatriates usually have multiple superiors who may have different performance expectations (Gregersen et al. All ﬁve subsidiaries belong to MNEs that are signiﬁcant players in the global IT industry. The nature of expatriate job is also related to EPM. Interview ﬁndings immediately follow the literatures under each topic of EPM. Hence. training and development. Company size is found positively related to the adoption of formal management processes (Milliman et al. or line organization. which is important for the organization’s development of future human resources. Tung (1981) indicated that job categories and the duration of expatriation could affect expatriate selection criteria. performance appraisal and review feedback (Suutari and Tahvanainen. They are all highly internationalized MNEs with many operational units around the world.IJM 26. the contextual factors in our study mainly involve variables within the organizational context. and can help employees grow and develop the competencies needed now and in the future (Beer. and the nature of the expatriate job are the most mentioned contextual variables within the organizational realm. project. Company size. In the following paragraphs. while the rest employs around 500. 1972). the nature of the expatriate mission becomes the key variable examined in this study. the host country manager is generally more involved in goal setting. The ﬁve ﬁrms studied in our research are quite homogenous in the domestic and international context. Expatriates personnel interviewed are all stationed in Taiwan or China. and performance-related pay. organization structure. we ﬁrst report our research methodology and review relevant literature concerning each aspect in PM. Implications for practitioners and for further theory developments are discussed in the last section.. 2000). In her investigation of IHRM practice. Snape et al. . Where the expatriate job is long-term and managerial in nature. performance appraisal. organizational structure. The study on Finnish MNEs by Suutari and Tahvanainen (2002) conﬁrms this assertion. 1998). Many MNEs refer this area as “the Greater-China-Territory” and regard these places possess very similar Chinese national culture. 2002). is related to similarities and differences in EPM practices (Suutari and Tahvanainen. we did not ﬁnd any differences in terms of EPM arrangements because of the differences in company size. expatriates are expected to accomplish different tasks and their performance is likely to be evaluated according to the parameters of their assignment. Nevertheless. whether a matrix. including goal setting.
differences in goal-setting arrangements were found to coincide with the different nature of the expatriate’s mission. Research on the beneﬁts of involving employees in setting speciﬁc performance goals found that targets were attained more often when employees participated in the process than when they were assigned by supervisors (Meyer et al. The interview answers were tape-recorded and later transcribed into a summary that was subsequently conﬁrmed with the interviewee to correct for any errors. However. task characteristics and duration of assignment (Tahvanainen. such as that of a troubleshooter. mobilizing effort and motivating individuals to develop goal attainment strategies (Locke and Latham. the home country manager will engage in the goal-setting process. 1998). During the subsequent interviews. In their investigation of Finnish expatriates.Research methodology Between August 2001 and January 2002 we conducted semi-structured interviews with 31 randomly selected expatriate employees and ﬁve human resource managers of those above-mentioned ﬁve MNE subsidiaries. Since such goals can affect business by directing attention and action. the extent of their involvement in deciding the expatriate’s goals depends on his position. 2000) and are listed in the Appendix. 1965). Philips. Tahvanainen. This information was then cross-checked with the relevant company’s human resource manager to correct for any inconsistencies or discrepancies. the prerequisite condition for better employee performance is to include them in the objective-setting process (Lindholm. 1984). if the assignment is speciﬁc and short-term oriented. Their companies operate in the semiconductor and TFT-LCD segments of the highly competitive IT industry. the expatriate respondents were asked to describe in detail their own company’s EPM systems. The participating expatriates are technical engineers and mid... Conversely. These ﬁrms . which took around one-and-a-half to two hours. Expatriates in Hitachi. Gregersen et al. Samsung. When the expatriate is in charge of important managerial tasks and stays on longer. From our interviews. 1999. and Winbond are to served terms of more than a year. Interview questions were adapted from relevant studies (e. 1993). 2000).to high-level executives stationed in Taiwan or China. the ﬁrst-level supervisor and employee are the main participants in communicating and then establishing the expected target. Lindholm et al. Expatriate performance management 161 Goal setting and EPM Corporate goals are the practical expression of tactical and strategic directions to which any company aspires.. Suutari and Tahvanainen (2002) found that the host and home country’s managers were the main participants in the goal-setting process.g. We then consulted experienced researchers in this ﬁeld as well as practical managers to ascertain the appropriateness of the wording of our questions. In a domestic setting. Both the home and host country’s managers may get involved in the process due to the possible close relationship between the expatriate’s performance and that of his operating unit (Oddou and Mendenhall. the situation becomes more complicated in an international context (Ilgen et al.. Interview ﬁndings are summarized in Table II. such as a mid-level manager. However. the host country manager will get more involved in deciding the expatriate’s objectives (Tahvanainen. 2000). 1996. 2000).
ordinary position engineer: – 1st self rater – 2nd departmental general manager in home country Long-term. Key characteristics of MNE performance management systems Performance appraisal Training and development Performance-related pay Clear link between performance and compensation Cash bonuses and stock options Link between performance and compensation not clear Seniority-based pay system Cash bonuses (continued) Goal setting Short-term: sending unit’s general manager Long term: host country’s general manager Self-setting. biannually for development purposes: – 1st self rater – 2nd immediate supervisor in host country – 3rd departmental general manager in home country – 4th ﬁnal.IJM 26. managerial position engineer: – 1st self rater – 2nd product line general manger in host country as well as client – 3rd department general manager in home country Open feedback interview exist Annually for managerial purposes. jointly decided by host country supervisor and departmental general manager in home country One way feedback discussion Orientation Language training Seldom take training programs while on assignment Can apply to host location supervisor No clear connection between performance result and career development Applied global university Seldom take training programs while on assignment No clear connection between performance result and career development AMT (American) Hitachi (Japanese) Table II.2 162 Company Annual performance appraisal Short-term. then ﬁnalized by host country manager .
then ﬁnalized by host country manager Clear link between performance and compensation Cash bonuses and stock options Expatriate performance management 163 Table II. then ﬁnalized by host country manager Samsung (Korean) Self-setting.Company Biannual performance appraisal: – 1st self rater – 2nd immediate supervisor in home country Open feedback in interview Biannually for managerial purposes. annually for development purposes: – 1st self-rater – 2nd immediate supervisor in host country – 3rd departmental general manager in home country Open feedback in interview Biannual performance appraisal: – 1st self-rater – 2nd immediate supervisor in host country – 3rd next level supervisor (usually host country general manager) – 4th divisional general manager in home country Feedback depends on manager Orientation Seldom take training programs while on assignment Can apply to host location supervisor No clear connection between performance result and career development Orientation Language training Can apply to host location supervisor No clear connection between performance result and career development Orientation Seldom take training programs while on assignment No clear connection between performance result and career development Goal setting Performance appraisal Training and development Performance-related pay Clear link between performance and compensation Cash bonuses and stock options Philips (Dutch) Self-setting. . then ﬁnalized by host country manager Clear link between performance and compensation Senior managers: cash bonuses and stock options Ordinary expatriates: cash bonuses Winbond (Taiwanese) Self-setting.
neither was able to show whether MNEs arrange performance appraisal for different purposes at speciﬁc time periods. Suutari and Tahvanainen (2002) reported similar ﬁndings. scholars recommend companies to divide these evolutions into separate sessions (Kindall and Gatza. However. which involves only persons who are stationed in Taiwan for several years: . For long-term expatriates who stay in the host country for more than three months. part of my performance goals is decided jointly by my boss and my client ﬁrm’s executives (AMT). Performance appraisal and EPM To locate and highlight the link between individual performance and organizational goals. 164 We have to set our own performance goals and get our [Taiwan] manager’s approval (Samsung). Jackson and Schuler. Hitachi. the subsidiary’s product line manager sets their performance goals after the needs of AMT’s clients have been checked: We are also evaluated by our clients. These facts indicate that MNEs are very practical in terms of the goal setting process in EPM practices. Philips. Frequent meetings between supervisor and subordinate can produce intensive interaction and feedback. we found that divergent arrangements in appraisal frequency relate to differences in the nature of the expatriate’s mission. That begs the question as to how often such an appraisal should be held. he sets my performance goals (AMT engineer. depending on the nature of the expatriate’s mission. (1996) found that annual evaluation is most popular in MNEs (82 percent). who are all technical engineers: My boss in the US tells me what to do. companies have to implement performance evaluation periodically (Murphy and Cleveland. we think the difference observed in goal setting arrangements is based on the unique demands of the expatriate’s mission. In an EPM survey of American expatriates. expatriate duration less than three months). However. 1972). The sending unit’s general manager sets the goals for short-term expatriates. Appraisal frequency From our interviews. improve workplace communications. followed by biannual or quarterly intervals (9 percent). and identify additional training needs of employees.2 all adopt similar goal setting process: their expatriates set personal performance goals to be approved by host country manager: I need to set my own work goals every six months and discuss them with my direct supervisor here (Philips). 2003). and Samsung all conduct biannual performance appraisals. 1963).IJM 26. 1995. For instance. Based on the above. Since the nature of performance appraisal for managerial and development purposes are quite different and even contradictory (McGregor. Gregersen et al. AMT is the only company that conducts an annual evaluation. Winbond. The goals for AMT’s expatriates were set in a different way. the time and cost for preparation and implementation is a negative factor that also needs to be considered.
AMT is the only company that uses its clients as rater: . Owing to geographic and temporal limits. peers. Therefore. some minor differences can be found in Philips. scholars contend that performance appraisal can be carried by multi-raters. they adopt self-rating. Expatriate performance management 165 Still. (1996) found the expatriate’s chief appraisal rater to be his immediate supervisor in either the host or home country. Gregersen et al. multi-evaluators are recommended as an appropriate method for EPM (Dowling et al. The higher the position. In our survey. 1995). AMT. 2003). who writes my ﬁnal performance appraisal report (Samsung).. and credibility of the PM system. objectivity. My self-evaluation will be reviewed by my immediate supervisor here and then sent to the divisional general manager in the home ofﬁce. In their survey of Finnish expatriate engineers. In their study of US-based international consulting ﬁrms. performance evaluation is ﬁnalized in Taiwan and the results are sent directly to the headquarters in Eindhoven. the more likely the home country manager will become involved. self-appraisal. Suutari and Tahvanainen (2002) likewise found that Finnish companies favor the host country manager (54 percent) and the home country manager (35 percent) as the main evaluators. Suutari and Tahvanainen. and Hitachi. To help enhance the fairness. It seems that AMT’s different arrangements in appraisal frequency are based on sound reasons that reﬂect the nature of their expatriates’ missions. Since Philips Taiwan is one of the company’s designated global research and development (R&D) centers. 1999. such as supervisors. the international environment produces additional challenges for MNEs to evaluate expatriate performance accurately. Some MNEs also allowed expatriates to review their own performances. and home country executive’s rating to evaluate expatriate performance: I need to conduct a self-appraisal on how well I meet my goals since the previous evaluation period (Winbond). Holland for reference. We can see their results immediately. Appraisal rater The immediate supervisor is typically regarded as the person in charge of evaluating an employee’s performance (Murphy and Cleveland. but peer and customer reviews were found to be less common. without any further review: Under our company’s organization structure. These expatriate engineers are not involved in our annual performance appraisal (AMT HR manager). Philips’ different arrangements in performance rater seem to relate to its organizational structure. 2002). subordinates. All our ﬁve MNE subsidiaries were found to use multiple raters. and customers (Jackson and Schuler. we enjoy certain autonomy here (Philip Taiwan’s HR manager). Using multiple resources is seen as a good idea since different individuals can see different facets of an employee’s performance. immediate supervisor’s rating in the host country. Tahvanainen (2000) and Suutari and Tahvanainen (2002) also showed that the expatriate’s organizational position inﬂuences whether the home country manager participates in the performance review.Many of our expatriate engineers get their jobs done within three months. Self-assessment ranked third.
It seems that Hitachi’s special arrangements are related to cultural factors derived from the MNE’s home country. From our interviews.2 Doing so is necessary. My ﬁnal evaluation result will be jointly decided by my local superior and the headquarters’ general manager (Hitachi’s expatriate manager). In our company. the performance appraisal procedure for expatriates is largely the same as that used in our headquarters (Samsung). emphasizes joint decision making between host and home country supervisors in assessing expatriate performance: After my supervisor has completed my performance evaluation. Philips. This way. on the other hand. . 166 It seems this minor difference is logical adjustment based on the nature of the expatriate mission. by the parent ﬁrm’s culture. we save a lot of trouble in avoiding conﬂicts and promote harmony among colleagues (Hitachi Taiwan’s HR manager). Previous research indicates that Japanese companies in general possess a culture that emphasizes collectivism and a desire to maintain harmony (Morishima. and Samsung all have formally established criteria and use the same performance appraisal form used by their headquarters: Before my assignment here [in Taiwan].IJM 26. we found that all the ﬁve MNE subsidiaries use the same appraisal form used by their headquarters. and. the report is sent to the headquarters to be reviewed by our divisional general manager (Hitachi expatriate engineer). Performance form and EPM The decision of whether to adopt a standardized or customized performance form and criteria in evaluating an expatriate may signiﬁcantly inﬂuence the accuracy and fairness of the EPM. Gregersen et al. However. They used the same performance appraisal form to evaluate my performance (AMT). AMT. To sum. 1995). assignment site characteristics and even his knowledge about the company’s foreign operations (Oddou and Mendenhall. Scholars argue that the performance criteria should be adjusted as appropriate to reﬂect the expatriate’s organizational position. I had another expatriate experience in Singapore. organizational structure. the above-mentioned minor differences in the arrangements of performance raters appear to be based on practical reasons and are decided by the nature of the expatriate’s mission. this practice may sacriﬁce the validity of the performance review since local situational contexts are neglected in the appraisal process (Murphy and Cleveland. (1996) reported that over three-quarters of their survey sample used a standardized performance form. 1995). I spend over half of my working time in my client’s factory during my expatriate assignment (AMT engineer). Hitachi. It is typical in a Japanese company to make decisions in a collective manner. The available empirical evidence appears to support this assumption. to some extent. The standardized performance form can make comparisons between expatriates at different sites much easier for subsequent managerial decision making. 2000).
Tahvanainen (2000) found that mid-level expatriates were generally satisﬁed with feedback when their host country managers were in charge of the interviews. and in Japanese companies in general. there are some costs involved. 1995). Expatriate performance management 167 It seems that both Western and Asian companies (AMT. Feedback provides a communication channel to help clarify and improve work processes. and staff training and developmental needs on a regular basis (Murphy and Cleveland. I state the reasons why I am assigned here. In our study. did not establish formal performance measurement criteria or objective measurement standards. it is important to maintain a harmonious atmosphere with one’s associates (Hitachi Taiwan’s HR manager). Morishima. provide only one-way feedback: It is largely my boss telling me what he thinks of me. It follows that Hitachi’s parent company culture. All expatriates interviewed unanimously said that they fail to see any clear connection between their performance appraisal results and future career development path: . Feedback interview and EPM Once the appraisal has been completed. Moreover. Despite the beneﬁts of feedback interviews. list all the jobs that my boss and I have agreed that I should do. Hitachi’s managers. organizations normally require supervisors to discuss the appraisal results with their subordinates. is related to Hitachi’s different arrangements in EPM practices.. 1995. Their appraisal procedures consist mainly of ﬁlling out narrative reports: In my report. I need to summarize my progress and give by boss a very clear picture of what’s going on here. and even Japanese national culture in general. we found that executives in AMT. 2002). two-way feedback interviews to expatriates. I don’t argue with what he says (Hitachi). Philips. expected performance. and Winbond all offer open. and respect for seniors are key characteristics of Japanese culture (Takahashi. Samsung. With regard to the EPM. however.Hitachi and Winbond’s performance measurement criteria were also the same as used by their headquarters. on the other hand. Many supervisors claim they do not have the time to do detailed staff appraisals. They also face considerable work pressures that constrain their ability to provide staff with regular feedback. and Samsung) may use standardized appraisal forms in EPM. In our company. lifetime employment. 1990. without any adjustments to reﬂect host country status. all companies surveyed adopt the same performance appraisal criteria as those used by their headquarters. These two companies. Huo et al. workplace conditions. the geographic distance between the evaluator and the expatriate may make it difﬁcult to provide regular feedback and so undermine the effectiveness of the performance interview. Philips. and tell him how much I have accomplished with my works (Hitachi). Harmonious human relations. Such rich information can not be adequately conveyed by just a series of numbers (Winbond).
One potential beneﬁt of integrating the EPM within the PM system is that it helps improve the expatriate’s competence and ability because of the close link between feedback review and training and development courses. 1998.IJM 26. this is not a universal phenomenon. Since all our clients’ engineers speak English. The performance appraisal can also highlight expatriate’s potential for a loftier role within the MNE and offer long-term career planning advice. I found the class quite useful (Winbond manager). on-the-job training. is to do a good job. This provides a clear picture for expatriates and offers intrinsic motivation for better performance. and my job is mostly technical in nature. but they do not see clear connections between expatriate performance results and their future career development. here. making it difﬁcult for them to operate effectively (Brewster and Harris. Samsung. 1990. I have no idea about my next assignment. I shall be called back to the main ofﬁce. and Winbond all offer extensive pre-departure training. and also alleviates their potential anxiety over an uncertain future (Tahvanainen. However. Training and development and EPM This section focuses on pre-departure training. Even though we speak the same language. as American MNEs are less likely to carry out this training compared to their global counterparts (Black and Mendenhall. none of the MNEs in our study offer systematic on-the-job training to their expatriates: . I have no idea about my next assignment (AMT). 1999).. MNEs tend to provide expatriates with pre-departure training. such as language and sensitivity training (Dowling et al.2 After this assignment. 168 I don’t know where I will end up after this assignment (Samsung). all the expatriates interviewed are pragmatic about their work situation. 1988). From our interviews. I still attended the company’s orientation before I was expatriated to China. Based on past experience. I think. such as orientation or culture awareness programs: I attend Chinese classes three months before my assignment here (Samsung manager). and development programs. In contrast to the provision of pre-departure training.. 1999). I shall go to any position where my superiors and my colleagues seem ﬁt (Hitachi). we found that Hitachi. Stahl et al. I don’t ﬁnd cultural orientation classes before assignments necessary (AMT engineer). right now! (Philips). Dowling et al. MNEs are aware that most expatriates face signiﬁcant problems in adapting to their new environment. What is important. Philips. Basically. the supervisor can determine his deﬁciencies and arrange for appropriate training program to improve his job performance (DeGregorio and Fisher.. AMT is the exception: My mission is to solve technical problems for industrial clients all over the world. In light of the expatriate’s appraisal results. To improve their cultural awareness and cross-cultural suitability. 2002). 1999).
In our company. Nevertheless. Samsung. expatriate compensations include cash bonus and stock option plan. we found that AMT. the system provides real motivation that produces important employee and organizational gains (Jackson and Schuler. Samsung places greater emphasis on merit pay. Compared to equity-based rewards. with compensation essentially based on seniority and job tenure: In our company. The linkage between employee performance and compensation in Hitachi is vague. 1991). My annual compensation package contains both cash bonus and stock option plan (Winbond). a PRP compensation arrangement can convey a sense of employee ownership (Pierce et al. 1999). managers and engineers alike (AMT). with the performance evaluation result underpinning managerial decisions on promotion. 2003). We do not offer on-the-job trainings for our expatriates here (Hitachi Taiwan’s HR manager). only offer a cash bonus to expatriates managers and technical engineers. which is based on an individual’s performance and competence: If I can create a brilliant sales record this year. Thus. Hitachi. Regarding the different types of PRP. all expatriate personnel receive cash bonus. Expatriate performance management 169 Performance-related pay and EPM In addition to potential improvements in human capital provided by the experience of an overseas posting. Performance-related pay (PRP) is one of the main rewards that MNEs offer expatriates (Dowling et al. proﬁt sharing and salary adjustments. In particular. the company thinks I should be able to handle the situation from my experience (Winbond). . such as stock and stock options. my annual income may exceed my boss’s salary (Samsung).Since I already occupy a management post.. the literature on domestic companies suggests that cash bonuses and equity incentives. the motivational effect of a cash bonus is direct and immediate. My performance evaluation this year is marginally related to my income (Hitachi engineer). and Winbond all offer cash bonus as well as stock options to their expatriate managers. Besides. 1974). the expatriate also cares about monetary rewards. with no stock option (Hitachi’s HR manager). 2002). the execution of stock sales and stock options offer employees much more proﬁt potential. are widely used (Milkovich and Newman. Furthermore. From our interviews. PRP is a compensation scheme that encourages expatriates to put in more effort to complete their assigned job tasks (Jackson and Schuler. These four companies also maintain a clear connection between expatriate performance and pay.. It also provides a relatively objective and logical way to allocate ﬁnancial rewards among employees (Mobley. Philips. on the other hand. 2003). A considerable portion of my income is decided by my performance on this job (Philips). PRP introduces a ﬂexible element into the expatriate’s compensation package that could help alleviate the high costs of expatriate management to some extent.
because of our study design. It is different from western company’s methods (Hitachi manager). 1995.IJM 26. 1977). Many Japanese companies believe that not deciding employee compensation by short-term performance record is helpful in nurturing stable and long-term employment relationship. Same criteria for appraising expatriate performance as used by headquarters As noted above. Some of the EPM practices we observed comply with the MNE headquarters’ way of doing.. may not be necessary for these MNEs. Hitachi’s different arrangements. Huo et al. 1990. Hitachi’s particularities in PRP arrangements can be attributed to its corporate culture and typical Japanese management style in general. MNEs tend to use expatriates as a vehicle to convey corporate cultural messages. desire to maintain harmony (Morishima. in feedback interviews.2 One’s salary level is basically decided upon length of company service but not on short-term performance. and respect for seniors are the key characteristics of Japanese culture (Takahashi. Since PM practices can signiﬁcantly inﬂuence employee behavior. may be related to Japanese companies’ characteristics of high collectivism. Summary and discussions Here we summarize the similarities and differences in EPM practices that emerged from our interview process. Some EPM practices inﬂuenced by parent company cultural factor We found that Hitachi differs from other companies in appraisal raters. Morishima. lifetime employment. the MNE home country’s inﬂuence will become apparent in EPM practices. followed by some tentative conclusions. In order to conﬁrm our preliminary ﬁndings. This provides some support to the argument that MNEs use expatriate personnel as informal and subtle control mechanisms to coordinate business action between headquarters and subsidiaries (Edstrom and Galbraith. and long-term and stable employment relationship (Takahashi. MNE headquarters’ cultural factors affect certain aspects of EPM practices. Loose linkage between performance results and career development The ﬁndings point to a loose linkage between performance results and career development that has certain implications. therefore. in-depth interviews with expatriates in the MNE subsidiaries. and in the connection between performance results and compensation. it is suggested that surveys using larger samples should be conducted to explore the cultural inﬂuences that MNE headquarters exert on their subsidiaries concerning EPM practices. This supports the view highlighted above MNEs tend to exert corporate subtle inﬂuence on subsidiaries through international transfer of managers. and we certainly believe so here (Hitachi’s HR manager). in PRP arrangements. 1990). 170 Prior research emphasizes that harmonious human relations. we have only conducted cross-sectional. 2002). that is. Under such circumstances. 1995). However. such as joint decision making in appraisal rating. and hence are not adjusted to reﬂect local operating conditions. As the previous quotations indicated. If MNEs transfer international managers to . one-way feedback interview. and compensation decided on job tenure. Therefore. the MNEs surveyed do not make adjustments to take account of host country conditions. Local adjustment.
cultural inﬂuence from the MNE home country stands out as relevant. Since all the MNEs in our study are highly internationalized and all the expatriates are stationed in Taiwan or China (controlling for the international and domestic context). companies that do not provide adequate opportunities for professional growth and career advancement upon repatriation may lose valuable human capital to competitors (Stahl et al. The second implication is a comprehensive model of strategic EPM should be proposed. In a later survey. A substantial percentage of repatriates feel dissatisﬁed because their companies fail to capitalize on their overseas experience (Black et al. Suutari and Tahvanainen (2002) studied 301 Finnish expatriates within a corporate context and found that EPM practices as signiﬁcantly affected by the host country location. and irrelevant (Selmer. linking company strategy with expatriate compensation practice. we learned that these different arrangements are based on sound reasons that can be traced to the different nature of expatriate missions. Hence. which asserts that contextual factors of EPM are composed of three layers. Similar efforts should be done on EPM. These ﬁndings have two implications. Expatriate performance management 171 EPM practices differ according to different nature of expatriate mission Some MNEs involved in our study adopt different arrangements in the goal setting process. 1999). However. 1995). According to strategic HRM scholars’ assertions (Schuler et al. and in the provision of pre-departure training. 1977). For instance. . HRM arrangements are to be dictated under this kind of strategic expatriate management model. Such a model will be instrumental in helping MNEs nurture their global management talents in obtaining a competitive advantage. sometimes in competing ﬁrms within the same business (Stahl et al. From our interviews.. If the layer of the context concept is forgotten. one may ﬁnd the MNE’s home country inﬂuence to be a signiﬁcant factor in one survey but missing from another. 1996). it is possible for scholars to develop a theory delineating when MNEs pursue a certain global operating strategy. First. all the expatriates surveyed did not have a clear picture of their future career development path. The research design may signiﬁcantly inﬂuence what is found. one may expect that these companies will have an integrated plan for the training and development of these overseas personnel.nurture global management talents (Edstrom and Galbraith. in appraisal frequency. we looked into the EPM practices in the subsidiaries of ﬁve MNEs with different national origins. haphazard. It is easy for such dissatisﬁed workers to ﬁnd jobs in other companies. from our interviews. 2002).. In our study.. Such a loose linkage may have negative consequences for the MNE. certain sets of HRM practices should be adopted to nurture the needed human capacity. Instead. Milkovich and Bloom (1998) proposed a strategic ﬂexibility model of international compensation. in performance raters. host country location ceases to be a differentiating factor. Later research on EPM should ﬁrst decide at what contextual altitude to explore this problem. It seems that MNEs need to do a better job in effectively capitalizing on their international management talents.. Prior research indicates that corporate expatriate management systems tend to be insufﬁcient. From the extant literature of global MNEs strategy (Bird and Beechler. it provides tentative support to Tahvanainen’s (1998) EPM model. 1999). certain kinds of human resource capacity will be needed. 2002).
They should have many years ahead in their professional careers. do these purposes differ in importance under different circumstances? Will MNEs’ EPM practices differ under different emphasis of expatriate strategic missions? How do different EPM arrangements affect expatriates’ satisfaction and job performances? Our ﬁndings also bear meaningful implications to practical managers. They do not have a clear idea of what to do with these people after their repatriation. Participating expatriates are mostly engineers and middle level managers aged 30 to 45. If the purposes for international transfer of management talents are based on technical necessity. Such ﬁnding may indicate that MNEs may not have comprehensive plans in nurturing their global management talents. most of the participants in our study are expatriates stationed in the MNE’s Taiwanese subsidiary.2 172 Lack of on-the-job training during expatriate mission From our interviews. We believe that. On the other hand. since our research purpose is to obtain a detailed understanding on EPM through exploratory study. If so. then MNEs high-level executives may want to examine if their EPM practices are encouraging the wanted behaviors. Expatriate personnel have to improvise in this process to overcome their own challenges. MNEs shall have a comprehensive understanding of what to do with their global management talent pool. First. This may be because some expatriates are at the management level. and their companies ﬁnd less need for these managers to receive on-the-job training. do these ﬁrms have clearly delineated plans for these expatriates now and after their foreign assignment? All the participants in our study know nothing about the linkage between their present position and future career development paths. Second.IJM 26. 1977). Our ﬁndings suggest that some EPM practices are inﬂuenced by MNE parent company’s cultural factors and that EPM practices differ according to different expatriate missions. we ﬁnd expatriates’ performance results are marginally related to their later career developments. The former ﬁnding tends to indicate that MNEs use expatriates as a vehicle to exert subtle control over subsidiaries. if scholars can come out with a more complete EPM model as mentioned in the above paragraph. we found that all ﬁve selected MNEs do not provide on-the-job training for expatriates on their overseas missions. This has somewhat . then. If MNEs want to nurture global management talents through international transfer of management personnel. 2000). it is no wonder that MNEs do not provide any on-the-job training to expatriates during their overseas missions. Some of our ﬁndings may be caused by speciﬁc industry factors. the lack of on-the-job training may be because these MNEs do not have a comprehensive plan for capitalizing on their global management capital. so they do not know what kind of training to provide in the host country that will nurture their future capabilities. Opinions from headquarter personnel are largely neglected. If MNEs send managers overseas to nurture their global administrative ability (Edstrom and Galbraith 1977). Some inherent limitations of our survey have to be considered. we can only observe small number of ﬁrms in one industry. and if the purposes of PM involve the induction of expected employee behavior (Tahvanainen. and head quarters’ exertion of subtle control (Edstrom and Galbraith. Only then will they be able to capitalize better and systematically on their international human resources. For instance. Later researchers can explore the strategic purposes of expatriate missions and their impact on EPM practices. Later research involving large number of ﬁrms from multiple industries should be conducted. nurture of global management talents.
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pp. and Redman. and normal employees)? Goal setting Q1) Q2) Q3) Where are the performance goals set (in the host or home country)? Who set the goals (e. 8 No. 267-75. 231-46. pp. (1998). V. Human Resource Management: An International Comparison. Tahvanainen. 37 No. R. 37.L.L. “Employee ownership: a conceptual model of process and effects”. J. Human Resource Management Review. 1. D. 55-75. Vol. Snape. 8 No.. E.g. pp. Tung. and Tung. Stahl. Expatriate performance management 175 Further reading Guest. 3.L. R. J. Jr (1996). Vol. middle manager.L.. and Slocum. top manager. (1991).L. pp. Helsinki. (1981). (Ed. Schneider.Pierce. or are there any local adaptations? Are there different performance management systems for different types or levels of employees (top manager. 1. Vol. Business Horizons. Journal of International Management. 4. M. Journal of World Business.W. 2.E. Vol. 13 No. 263-76. “The antecedents of performance management among Finnish expatriates”. (1998). Jackofsky. S. pp. Vol. S. Vol. (2000). International Journal of Human Resource Management. (1999). 5 No.K. 39 No. Berlin.A. “Expatriate performance management: the case of Nokia Telecommunications”. 121-44. “Managing human resources in Mexico: a cultural understanding”. Jackson. 5. Schuler. pp. Helsinki School of Economics Press. R&D employees. 3. 16 No. Vol. Tung. R. S. pp. and Morgan. 841-61. M.E. “Selection and training of personnel for overseas assignments”. (1997). R.. and Tahvanainen.g. “Performance appraisal and culture: practice and attitudes in Hong Kong and Great Britain”. Academy of Management Review. Appendix. Human Resource Management. F. Expatriate Performance Management. International Journal of Human Resource Management. 68-78. 55-71. “Corporate expatriate career development”. operational)? .K. Interview questions Performance management systems Q1) Q2) Do the management of expatriates in your ﬁrm follow the HQs’ standardized system. de Gruyter. (2002). Selmer. (2002).. R.S. Suutari.. pp. ﬁnancial. Takahashi. pp. E. immediate supervisor)? What kinds of goals (e.C. pp.. 16 No. Tahvanainen. Vol. Rubenfeld. “Toward the boundaryless career: a closer look at the expatriate career concept and the perceived implications of an international assignment”. S. 27 No. 1. Columbia Journal of World Business. Human Resource Management. “Human resource management in Japan”. Miller. M. J. Y. (1998). in Pieper. Vol. Vol.). D. “National vs corporate culture: implications for human resource management”. pp. E. T. 216-27. (1990). International Journal of Human Resource Management. G. “A contingency work of selection and training of expatriate revisited”. “Human resource management and performance: a review and research agenda”. 1. 55-61. (1988). Vol. Yan. 9 No. 23-37. 1. Thompson.
subordinates.2 Evaluation Q1) Q2) Who conduct the evaluation (supervisor. self-appraisal and customers)? How often does the company do performance evaluation? Does the company do a feedback interview after ﬁnishing the performance evaluation? 176 Q3) Training and development What kinds of training and development programs have been provided to expatriates? Performance-related pay Q1) Q2) Are expatriates’ performance and their pay closely connected? What kind of performance-related pay does the company provide (stock. bonus)? .IJM 26. peers. options.
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